How was the performance of Standard Chartered Bank Nepal Limited (SCBNL) in the last fi scal year?
We have performed well for many years in a row. Our objective is not only to grow and register profit consistently but also to build a business which delivers the goods overall. We have seen through the crisis where many banks have not performed well. For banks, it is very easy to slip and make losses because they take undue risks. So our philosophy is to be prudent, take measured risks and show steady growth. What would you give the credit for your success over the years? We have continued to expand our products and services. This is receiving a huge patronage from the customers. The matter of pride and which is of great importance is a strong governance structure which is working very well. We are a compliant Bank. We have already been conferred the Banker of the Year 2009 Award. That was particularly pleasing for us. We also have been consistent with the quality of our portfolio for both the businesses i.e. Wholesale Banking and Consumer Banking. .

What explains the stagnation in the bank’s deposit collection and reduction in the earning per share during the last fi scal year compared to the year before?
If we keep giving bonus every year, the Earning per Share (EPS) will go down. The right comparison is to adjust the bonus share and then look at the EPS because we have not raised additional capital. If you add the bonus shares, you will see that we have steadily increased EPS every year. As far as the growth in deposits and the loans are concerned, you can refer to our balance sheet. It has grown modestly because we are careful about expanding credit in an uncertain environment.In fact, our deposits have grown and so have the loans. It is a steady growth.






 

What plans does the SCBNL board have for the shareholders in the upcoming AGM?
We have proposed for the AGM to approve a bonus issue of 15 per cent per 100 shares and a cash dividend of 55 per cent. I am confident that this will enthuse our shareholders a great deal.


 

Standard Chartered has indicated the willingness to acquire some BFIs in Nepal. What has been the progress so far?
We have never announced that we would acquire any institutions in Nepal. People have approached us but we are not ready at this point of time. We are open to the idea but the political situation needs to stabilise first. Nobody will invest money in an unstable environment.

NRB seems determined to put a cap on the salary and benefi ts enjoyed by the CEOs of the banks. Will it have any effect on your bank’s operation in particular and the banking sector in general?
We expect that the Central Bank will be practical about this matter but we will wait to see what they come up with. Unfortunately, only a handful of CEOs are being investigated. I have already discussed this matter with the authorities. I think they should not have any serious objection to individuals getting a certain pay. They are basically looking at some degree of equitability. As long as this reflects the size of the business and is not incentives only, it should not be a matter to worry about. The incentive system is not only about making short term profits.

What would you give the credit for your success over the years?
We have continued to expand our products and services. This is receiving a huge patronage from the customers. The matter of pride and which is of great importance is a strong governance structure which is working very well. We are a compliant Bank. We have already been conferred the Banker of the Year 2009 Award. That was particularly pleasing for us. We also have been consistent with the quality of our portfolio for both the businesses i.e. Wholesale Banking and Consumer Banking.



 

How is Standard Chartered viewing the proposed South Asian Regional Bank?
I am not aware of any development to this end. It may have been proposed to promote trade or the import-export scenario. I cannot imagine a bank as such unless it is set up for a specific purpose like trade promotion, facilitating trade among the South-Asian countries etc. There has been however, some talk about financing trade. The FNCCI, too, has mentioned about having a trade corridor in a meeting.

In Nepal the concept of branchless banks has not gained momentum, unlike in India. How do you view this?
We have definitely thought about such a possibility but it is still debatable. I really cannot commit anything at this point of time. We also look at the developments in other sectors, for example telecommunications. We would like to be doubly sure before we take the plunge into this endeavour.

 

What is your overall assessment of Nepal’s banking industry? Also, is SCBNL planning to introduce any new product?
At the industry level, our view is that there is tremendous prospect for growth in the long run. It has all the right ingredients for good growth. Banking Institutions always ride on the back of the economy because of the process of intermediaries. This sector is doing well not just in Nepal but in the most parts of South Asia. We are quite optimistic about the future. For us, this is a very good quality operation. We are proud that we enjoy a high reputation with our clientele. We are respected by a large section of the industry. The bank’s share prices reflect the confidence and appreciation by our shareholders and we are happy on this account. We are also proud of the quality of our governance as well as the service that we provide. We believe in long term business. Each year, we invest in increasing the number of ATMs, adding branches, inducting more staff, adding RMs and introducing new products. Once we see the economy picking up on the back of political stability, we’ll invest even more.

In the present context of Nepal, can the banking sector do anything from India or elsewhere?
Banking is one of the oldest professions in this world. There is no reason why we cannot do what others can, in different parts of the world. The building of a strong balance sheet means having the right ratios in terms of capital, liquidity and tenure. The quality of a bank’s balance sheet is the heart of its stability and performance. If you look at the Indian as well as other South Asian countries’ banking system, they survived through the crisis because of good balance sheets. Perhaps, they had learnt their lesson from the 1997 Asian crisis when over leverage of the Asian banks had resulted in weak balance sheets. As I understand, all banks in Nepal are not as prudent in the balance sheet structure as they should be. The Nepali banks must have sound balance sheets in order to stay healthy. Good balance sheets lead to good credit evaluating norms which are based on the analysis of cash flows and balance sheets of customers. The banks looking at long term operations almost always follow this mandatory process.

Are there new trends being set worldwide in the banking sector?
I’ll not exactly call it a new trend but rather a new stage, where the banking industry is in a post-crisis mode. However, we are not feeling the crisis here. The western crisis has affected banking both from the regulators’ and the bankers’ perspectives. Greater restrictions on liquidity as well as on compliance and prudential norms by the regulators have come to the fore. Earlier, most regulators were happy with a broad principle based regulation but now they are keen on a rule-based regulation. They want to check everything because they have been criticised for the failure of the banking system. Hence, the regulators are far more careful now. One thing that has changed after the global crisis is that more banks are focusing on relationship banking now. The crisis has made everyone realise that it is not right to approach different banks for different purposes. It is better to procure as many services as possible with the same bank. The lack of relationship with a single back hit the people hard. In times of need, they were unable to get financing from the banks. There is definitely a change in the mindset of the clientele. The banking system is evolving and I think the crisis has accelerated it. On a positive note, the banks are becoming more stable with time.